Yesterday, Andy wrote: "Your view of High Deductible Insurance plans is what is creating the meltdown in the insurance industry. What exactly is wrong with consumers taking responsibility for their own health care costs while maintaining affordable coverage for catastrophic events? The comparison of health insurance to auto insurance is overused but very fitting. If people expected the insurance company to pay for oil changes and new tires auto insurance would become unaffordable just like health insurance is today.
If this bill passes and the banks that provide HSA accounts are required to maintain proof of qualified health expenses the cost will fall to me the consumer. The HSA program is working for my family and millions of others. Adding government regulation will destroy the only option left for affordable health insurance. We need less government not more.
April 29, 2008 5:57 AM"
My response to ANDY
Andy, health savings accounts are a weak distraction from the causes and possible solutions to the current health services crisis that focus on the fear of consumers of not having any health insurance (no matter how bad it is ) and the greed of consumers in thinking that pre-tax dollar savings of up to $2900 per year for singles and $5800 per year for families will amount to even another month of solvency in the event they have a need for medical services. Consumer concerns require access, affordability, and quality health services.
* Health Savings Accounts and High Deductible Insurance coverage are designed to address affordability: paying for health services. By offering less insurance coverage, you save money...nothing new. Higher deductible plans have been around quite awhile whereas the Health Savings Accounts arm of such plans is fairly new (2003-2004). So the real issue is that you like the Health Savings Account arm of your high deductible coverage.
*I won't persuade you, but I will clarify that the emotional aspect of health insurance coverage where everyone's saying, okay, I've got some insurance is not effective for consumers because it distracts from the real issue which is that health insurance is only useful for those "catastrophic" events you believe you've foreseen through high deductible health insurance. In this context, the distraction of Health Savings Accounts does not change the core issue that health insurance company contributions to paying for needed medical services have been reduced while premiums have been raised, the less for more formula. No health insurance product has changed this win-win formula for insurance companies.
So now, if I follow you, you don't care about that because you've got a pre-tax dollars health savings account. These accounts have actually raised the amount of pre-tax dollars people can put in so that for a family instead of about two grand a year you can now put in about five grand a year. So if you've been doing this since this distraction started being marketed (2003-2004) AND if you've never touched those amounts, you've socked away ....under ten grand. And for this ten grand you're sold? Okay, you don't think that health insurance should have to pay for oil changes and tires...I AGREE!
Here's the rub Andy. With pre-tax dollars in the amount of up to five grand for a family for an account that can help pay out your high deductible and premiums (are you doing the math?), the ONLY thing these accounts will pay for is the oil change and the tires and then all you're left with is terrible health insurance coverage in the event you actually have to pay for needed medical services. Then you are in the same boat with the rest of us, maybe worse because the insurance companies and the insurance lobbyists are marching on...your high deductible plan will have fewer providers, lower allowable charges, more exceptions to treatment and you will be gathering your receipts, your bills and your insurance statements hoping to qualify for the current medical deduction for medical expenses exceeding 7.5% of income (but of course this is harder to reach because your premiums won't be included because they'll have been paid out of your health savings account).
*But you are still afraid...you're afraid you'll have to bear the cost of insurance companies and their banks actually keeping records on these savings accounts in the form of SUBSTANTIATION...you sound like an insurance company rep...they ALWAYS couch their actions in what it will cost the consumer. Why would you jump on the insurance company bandwagon that whines that it can't pay for sick people, that it can't cover expensive medications, that it can't authorize medical treatment, all the while raising the cost of less and less that they can do? What if they don't substantiate? Who cares? Everyone gets to put away their pre-tax dollars, it's their money anyway. Right now if the IRS knocks on your door, YOU are required to be able to substantiate that money withdrawn from your health savings account was used for medical expenses. Do you think that the IRS is not aware of the potential for tax-free scams involving these accounts? You don't like government, well, the government will not ignore those who put away this pre-tax money.
Substantiation shifts this responsibility to insurance companies and they should have it because they earn money from persuading people like you to get less insurance coverage by paying more. If you believe that high deductible plans and health savings accounts are the "only option left for affordable health insurance" then you more than anyone should want to preserve the integrity of that system by requiring effective record-keeping, first to prevent tax-free scamming and second so that you can avoid having to submit, resubmit and persuade your insurance company that you've actually paid for your high deductible expenses and reached that threshhold by having to prove it to the insurance companies after the fact. It's better to have that list of expenses you've paid for before you start making insurance claims and find out that they have disallowed, or recalculated your actual expenses to determine you haven't met your high deductible even though all your pre-tax dollars are gone.
If this is working for you, great but let the buyer beware Andy, you should look at IRS publication on HSA's (http://www.irs.gov/publications/p969/ar02.html#d0e988). Substantiation is not the key to consumer worry, the key to consumer worry is what kind of health insurance do you really have when you use this product since it is only an option right now in conjunction with a high deductible insurance plan?
You don't want substantiation? You are obliged now to substantiate your claims and there are other reasons that your records better be good. Let me know if you've talked to to your insurer about how they determine you've met your deductible. In the meantime, as a consumer of the HSA, I hope you were advised to appoint a beneficiary of the "savings" account and that you know there is a 10% additional tax placed on savings not used for qualified medical expenses and that medical expenses were not previously paid or reimbursed from any other source and that you didn't and won't take the medical expenses as an itemized deduction. Also, you can ask your insurance company for a statement from them itemizing your withdrawals even if they aren't responsible for any sort of substantiation because this may help you when you actually expect your insurer to help pay for medical services.
I'm with you Andy, health insurance is unaffordable. But the HSA is just another tradeoff it doesn't address reduced coverage or climbing costs it just helps consumers put a little aside in the meantime. And if you read the IRS rules, the money is subject to tax and penalties for a variety of reasons. I don't think this vehicle is the right one for consumers and letting health insurance companies off the hook for keeping records (which is their greatest gift when they can come to you and waste time saying "prove it") seems counterproductive.
